Data security

Although the specter of organized crime rings receives the brunt of the publicity, the proliferation of "garden variety" insurance fraud continues to badger insurance companies.In their efforts to implement best-practices claims management, fraud and buildup (the inflation of an otherwise legitimate claim) added between $4.3 billion and $5.8 billion to auto injury settlements in 2002, representing between 11% and 15% of all dollars paid for private passenger auto injury insurance claims that year.

Consumers of auto and homeowners insurance are vulnerable to the same potential conflicts of interest as commercial insurance buyers, according to a report recently released by the Consumer Federation of America (CFA), Washington, D.C.Using data from Best's Aggregates and Averages, 2004 Edition, total commissions paid to agents and brokers in 2003 for home and auto insurance ranged from zero to 30% of premium, the CFA reports. Overall, commission income was made up of roughly 90% regular commissions and 10% contingency commissions-the kind criticized by N.Y. Attorney General Eliot Spitzer.

Credit-scoring significantly improves insurance pricing accuracy when combined with other rating variables in predicting risk. That's the conclusion of a study commissioned by the Texas Department of Insurance (TDI).In December, the department released its preliminary findings, which showed poor credit scores were associated with more claims activity, and blacks and Hispanics on average have lower credit scores than whites (see Feb. issue, page 8.)

It's no surprise that the workers' compensation market has been challenged by a host of issues that have driven costs skyward for carriers and agents. According to the Council of Insurance Agents and Brokers (CIAB), Washington, D.C., commercial property/casualty insurance premiums continued to decline significantly during third quarter 2004.

SIMSBURY, Conn.--Looking to meet a growing financial need, The Hartford Financial Services Group is introducing a new last survivor universal life insurance policy to help affluent couples transfer their wealth to children and other loved ones. Hartford Advanced Last Survivor UL is a flexible premium universal life policy that is issued by Hartford Life Insurance Co. and Hartford Life and Annuity Insurance Co., subsidiaries of The Hartford. Last survivor policies insure two people, typically couples, and pay a death benefit upon the second death. Hartford Advanced Last Survivor UL provides affordable, permanent life insurance protection with an available secondary guarantee for the death benefit. The death benefit guarantee for Hartford Advanced Last Survivor UL is based on the claims-paying abilities of Hartford Life and Hartford Life and Annuity.

New York--Tower Group, Inc. today announced the appointment of Joseph P. Beitz to a newly created position as Managing Vice President, Program Underwriting, reporting to Michael H. Lee, Tower Group, Inc's President & Chief Executive Officer. Mr. Beitz's primary responsibilities will be the production and management of new program opportunities for the company, which will be underwritten by its own insurance company and through other insurance companies for which its managing general agency produces premiums.

TAMPA, Fla.-- SCI, a national leading Professional Employer Organization (PEO), announced today that it has renewed its agreement with top-rated insurance carrier Zurich, North America to provide workers' compensation coverage for its client company employees effective March 1, 2005, through February 28, 2006. "Our renewal with Zurich, once again, reflects the continued strength of SCI as a leading provider of PEO outsourcing services in the marketplace," said J.C. Dominguez, president, SCI. "We continue to improve our performance and refine our processes to exceed customer expectations. Working with the best companies in the market will allow us to extend the best products and services to our clients; Zurich is just one example of that."

PEARL RIVER, NY--ACORD and XBRL examine the need for data standards and their own roles in the overall communications flow in their newly released white paper, "XML Standards and the Insurance Value Chain." The document focuses on the flow of data within the insurance value chain and the importance of data standards to transport the information along the path for financial reporting and regulatory compliance.

CHATTANOOGA, Tenn.--In response to a rapidly growing voluntary benefits market, UnumProvident has announced enhancements to its critical illness and individual short term disability insurance products. The specified critical illness insurance now includes the option of base or enhanced coverage. Base coverage features a benefit payout for heart attack, stroke, permanent paralysis, kidney failure, organ transplant or coronary artery bypass surgery. Enhanced coverage includes all conditions listed under the base plan, plus an additional benefit if diagnosed with cancer. Enhancements also include increased benefit amounts for covered children, and, for eligible employee groups, the first $10,000 in coverage is guaranteed-issue (some restrictions apply).

Arrowhead General Insurance Agency Inc. announced that Chuck Brady has joined the company as president of the professional liability division, located in Torrance, Calif.

Over the next 18 months, employees will be spending more time online--not surfing the Web or checking e-mail but rather logging onto their company Web site and signing up for employee benefits with a click of the mouse. According to MetLife's recently released 2004 Employee Benefits Trend Study, employee self-service on the Internet is an important benefits strategy, particularly among large employers. As a result, companies expect a huge surge in e-benefits use over the next two years.

Newark, Calif.--Risk Management Solutions (RMS), a provider of products and services for the management of catastrophe risk, today announced that it will fund technology improvements for the Florida Coastal Monitoring Program that will support its collection of real-time wind speed data during major hurricanes. The Florida Coastal Monitoring Program (FCMP) is a joint venture to develop full-scale experimental methods to quantify near-surface hurricane wind behavior and resulting loads on residential structures. The program's aim is to provide data necessary to identify methods to cost-effectively reduce hurricane wind damage to residential structures.

SIMSBURY, Conn.-- The Hartford Financial Services Group, Inc., one of the leading sellers of group life and disability insurance in America, has acquired 100,000 group life and accident policies from the Union Labor Life Insurance Co., a subsidiary of ULLICO Inc. The $29 million purchase is a strategic acquisition by The Hartford's group life and accident insurance businesses, according to Richard Mucci, executive vice president of The Hartford's Group Benefits Division. The Hartford sells group life and accident policies through Hartford Life Insurance Co. and Hartford Life and Accident Insurance Co.

ATLANTA, GA--The year 2005 should be challenging, with additional complications from regulatory and legislative issues, say members of the LOMA Board of Directors. LOMA's Resource magazine surveyed members of LOMA's board for their views on what the industry can expect in 2005.

Conshohocken, PA--RippleTech, a provider of security, compliance and systems management solutions, announced today the launch of the LogCaster for Sarbanes-Oxley solution.

ISO, a provider of anti-fraud and personal injury claims solutions, has identified ten key factors that can help insurers reduce the rising costs of handling personal injury claims.

NEEDHAM, MA--New challenges in the US insurance industry are creating one of its most difficult operating environments in recent memory. In the context of such divergent issues as terrorist threats, state and federal regulatory activity, competition from other financial services players and tight global economic conditions, TowerGroup forecasts a cautious approach to technology spending by US insurers in 2005.

Over the years, a number of oxymora have established their place among the most popular in the American lexicon-among them "airline food," "jumbo shrimp" and "working vacation."These terms are all regarded seemingly as incongruous or contradictory. So is "business intelligence"--at least in the manner that it relates to the insurance industry.

The Texas Department of Insurance is the latest organization to enter the controversial arena of scrutinizing the use of credit scores by insurance companies. Many insurers use the scores to assess risk when underwriting auto and homeowners policies.In December, the department released its preliminary findings to the 79th Texas Legislature. And, because this study is the first of its kind to use actual policyholder data-as well as to undergo academic peer review-industry sources expect it may help to settle a contentious public policy debate.

Independent insurance agents have built their reputations serving customers, but now they're being asked to not only serve customers, but to protect their personal information.As individuals become increasingly vigilant about the privacy and security of their health and personal information, the onus has fallen on independent agents and brokers to safeguard this information, according to a new report by Agents Council for Technology (ACT).